Lower The Burn Tax Rate To 0% [Parameter Change]

With the 1-year anniversary of the LUNC on-chain burn tax approaching, it is time to reflect on its effectiveness and the future role in LUNC in general. The author argues that the past year has clearly indicated that the burn tax experiment has failed to achieve what it had set out to for at least the following reasons: 1) it alone will never burn down the supply for the next 300+ years; 2) it suffocates on-chain economic activity; 3) CZ has publicly stated that the burn tax will never work (CZ always says “build” not “burn”); 4) off-chain burns will never be implemented by the big CEXes; 5) projects/initiatives currently burn more than the burn tax (Binance, DFLunc etc.); 6) it prevents dApps from onboarding the Terra Classic blockchain; 7) it may have a handicapping effect on LUNC price when next bull market arrives as traders will prefer to trade in a tax-free environment. Don’t take the author’s word for it, though. Even back in September, 2022, when introducing the 1.2% burn tax in his Agora post, prof. Ed Kim listed the following potential negatives of a burn tax: 1) taxes are potentially detrimental to long term economic activity and utility on-chain; 2) existing dApps that do not account for taxes will be unsupported; 3) no guarantee that CEXs will burn-off chain; 4) tax may push remaining liquidity off-chain to CEXs that do not tax; 5) potential deterrent in attracting new VC/fund investors. In the opinion of the author, it is safe to say the above issues have materialized. For that reason Lunc community should stop assuming the burn tax as a self-evident part of Terra Luna Classic. The past year has proven the burn tax’s failure to meet the community’s high expectations that were had in September 2022. Any prior proposals that have been passed in relation to the burn tax have made promises to burn down the LUNC supply, which is now apparent will not happen at an acceptable rate. Additionally, since the above listed negatives will continue to exist as long as we have any burn tax in place, the author argues that any other efforts to adjust the burn tax (e.g. increase the tax/decrease the tax/introduce dynamic tax etc.) will never solve the above issues and will never be a net positive aspect in the future of LUNC. We have tried 1.2%, 0.2% and 0.5% tax rates (without any real justification as to why exactly such rate should be applied), but have never actually tested a tax-free environment. For this reason, the author proposes that it is time to snap out of the deflationary dream in the form of a burn tax and set it to 0%, thus creating trade- and dApp- friendly environment, and, most importantly creating a predictable environment for investors and developers alike. Any future attempts to increase the burn tax again should be carefully evaluated and approved only if there is a proper reason for doing so (e.g. re-introducing the burn tax with the aim of burning down the supply would not constitute a valid reason). To see the community’s discussion about this topic, please visit: https://commonwealth.im/terra-classic/discussion/12781-case-for-complete-removal-of-the-burn-tax-0 By voting YES, you agree to the proposed parameter change that will set the burn tax rate to 0%. By voting NO/NO WITH VETO you agree to keep the burn tax rate at 0.5%.